2013 (10) TMI 91 - AT - Service Tax

Penalty - Less service tax paid - Held that - After Considering the complexity of Taxation of Service (Provided from Outside India and Received in India) Rules, 2006 and the fact that the amount involved itself consisted of two components of different natures and majority portion was not taxable, benefit of doubt is given to the appellant and this is not a case where suppression or fraud or action with intention to evade tax is involved and hold that they were eligible for the benefit under section 73 (3) of the Finance Act, 1994 - penalty deleted - decided in favor of assessee.

Summary

Issues:
1. Whether penalty imposed on the appellant is justified in the case of non-payment of service tax.
2. Whether the appellant is eligible for the benefit under section 73(3) of the Finance Act, 1994.
3. Whether the penalty imposed on the appellant should be waived.

Analysis:

Issue 1:
The appellant, engaged in various activities including importing goods, was found to have a service tax liability of Rs. 27,79,057/- on certain receipts accounted as commission. Although they promptly paid a portion of the tax upon notification, a show cause notice was later issued proposing penalty and interest. The main demand was dropped, but a specific amount was confirmed along with penalty equal to that amount. The contention arose regarding the penalty imposed, leading to the appeal.

Issue 2:
The appellant's counsel argued that the non-payment was due to difficulties in understanding the tax provisions during the relevant period and emphasized the prompt payment upon notification. They sought the benefit of provisions under section 73(3) of the Finance Act, 1994 or waiver of penalty under section 80 of the same Act based on the circumstances of the short levy.

Issue 3:
In opposition, the Revenue argued that the case involved suppression of information, citing section 73(4) to counter the appellant's claim for benefit under section 73(3). The Revenue relied on the findings of the Commissioner (Appeals) to support the legality of the penalty imposition.

The judgment considered the arguments from both sides, acknowledging the complexity of the tax rules involved and the nature of the amounts in question. It was held that the appellant was eligible for the benefit under section 73(3) of the Finance Act, 1994, as the case did not involve suppression, fraud, or intentional tax evasion. Consequently, the penalty imposed on the appellant was waived, and the appeal was allowed by setting aside the penalty.

The stay petition and appeal were disposed of, with the decision being dictated and pronounced in open court.